06. Directors: appointment, power, authority.

Question 1

s. 250 of CA (1986): The term ‘…’ includes any person occupying the position of …, by whatever name called.

Answer 1

director

Question 2

The minimum age for a director is usually ….

Answer 2

16 years

Question 3

T/F: the maximum age for a director is the later of 75 years or normal pension age.

Answer 3

FALSE

there is no upper age limit.

Question 4

The directors of public companies should be voted on …

Answer 4

individually

Question 5

Anyone who acts as a director, although not validly appointed as one.

Answer 5

de facto director

Question 6

Anyone “in accordance with whose directions or instructions the directors are accustomed to act.”

Answer 6

shadow director

Question 7

T/F: accountants, solicitors, bankers e.t.c. are not usually deemed to be shadow directors.

Answer 7

TRUE

Question 8

A person sent to board meetings by a director to represent them and vote on their behalf.

Answer 8

shadow director

Question 9

T/F: the articles of association of a company may place further limitations on who may serve as a director.

Answer 9

TRUE

Question 10

T/F: a directors actions are valid even if their appointment is subsequently found to have been defective or void.

Answer 10

TRUE

Question 11

Any change in directors should be notified to the registrar within …

Answer 11

14 days

Question 12

A director may be removed by members via …

Answer 12

an ordinary resolution with special notice of 28 days.

Question 13

T/F: any provisions in a director’s service contract regarding payments for loss of office are void if members vote to remove the director.

Answer 13

FALSE

the dismissed director may claim damages under their contract of service.

Question 14

T/F: a director who is also a member may not vote on a resolution for their removal.

Answer 14

FALSE

see Bushell v Faith (1970)

Question 15

T/F: weighted voting rights cannot be provided for in order to make it impossible for a director to be removed.

Answer 15

FALSE

see Bushell v Faith (1970)

Question 16

Disqualification of a director may be general or specific by … respectively.

Answer 16

the courts or the articles

Question 17

The powers of directors are defined by …

Answer 17

the articles (constitution)

Question 18

T/F: the powers of directors are given by members to the board as a whole.

Answer 18

TRUE

not individual directors

Question 19

T/F: the board of directors can only exercise its powers through formal board meetings.

Answer 19

FALSE

it is considered sufficient if the directors are in communication with each other

Question 20

T/F: a board meeting can not be held if any director objects.

Answer 20

TRUE

Question 21

Whether or not the actions of one person bind another into a contract with a third party is dependent on whether they have …

Answer 21

authority.

Question 22

T/F: the company can rely upon provisions in its articles in order to avoid a contract entered into by a director without authority.

Answer 22

FALSE

provided that the thrid party is acting in good faith (which is presumed).

s.40 CA (2006)

Question 23

T/F: a person acting as a director or managing director despite not being appointed can nevertheless be deemed to have the authority to bind the company into contracts.

Answer 23

TRUE